China faces a potential backlash from critics, led by the US, to its exchange rate policy after it appeared to retreat today on promises to allow its currency to revalue.

Beijing's hints on Saturday that it would end a two-year peg to the dollar were initially welcomed as a positive step to redress unfair trading terms and end an approach attacked by many as currency manipulation. Analysts said that the move might also head off a potentially damaging trade row between China and the US at a G20 summit this week.

But in a follow-up statement to its "reform" pledge, made today, China ruled out a one-off revaluation and said there were no grounds for a big appreciation of the yuan. Those remarks left doubts over whether there would be any significant strengthening in the currency, thereby levelling the playing field between other major exporters and China, whose goods have been cheaper because of the peg.

The lack of any real commitment to revaluation incited fresh anger from overseas, and more attacks are expected when markets reopen for business today tomorrow. Some critics, particularly in the US, are calling for penalties on China and accuse it of keeping its currency artificially low.

The US Democratic senator Charles Schumer, a leading critic, accused China of "backing off" its promises.

"Just a day after there was much hoopla about the Chinese finally changing their policy, they are already backing off. It vindicates our initial scepticism," he told Reuters.

Schumer said that he would continue with other politicians to press for legal action to force Beijing's hand over its "unfair trade policies".

The move to peg the yuan in 2008 was designed to help China's exporters during the downturn but, as its businesses and wider economy have moved on, pressure has mounted for it to allow the yuan to appreciate once more.

With the issue threatening to come to a head at the G20 summit this week, China appeared to want to appease critics when it released a statement on Saturday night pledging to "proceed further with reform" of its exchange rate regime and to introduce more flexibility. Analysts have said that the statement did effectively end the de facto peg to the dollar and that the yuan would now start to strengthen, albeit gradually.

Policymakers at the People's Bank of China, the country's central bank, were quick to stress that the move had been made independently and reflected economic changes rather than any outside coercion. Those who had been pressuring China said that action was now key.

President Obama welcomed China's initial statement as "a constructive step that can help safeguard the recovery and contribute to a more balanced global economy".

But his treasury secretary, Timothy Geithner, was more direct in his demands for follow-up action. "This is an important step but the test is how far and how fast they let the currency appreciate," he said.

US politicians have argued against the yuan remaining pegged at about 6.83 to the dollar because they feel it makes Chinese exports more competitive. They say an artificially low yuan, also known as the renminbi, has hurt US exports and cost jobs as the country battles to bring down a one-in-10 unemployment rate.

But in its statement, China defended the currency policies of the past two years as having helped all countries during the financial crisis: "The stability of the renminbi exchange rate has played an important role in mitigating the crisis's impact, contributing significantly to Asian and global recovery, and demonstrating China's efforts in promoting global rebalancing."

The pledge of more flexibility only days before the G20 meeting, to be held in Toronto, came as a surprise to investors and policymakers alike.

"The one certainty about Chinese macroeconomic policy is the element of surprise," Glenn Maguire, Asia Pacific economist at Société Générale, said. He forecast that the de-pegging would increase the purchasing power of both businesses and households in China, having a knock-on effect on other countries.

"The move to de-peg the yuan will once again unleash powerful cyclical forces," he explained. "The bottom line is that yuan appreciation is effectively China sharing more of its growth with the rest of the world."